Mendez Hospital showed the following major hospital costs at various levels of activity for CY 2020: MonthHospital AdmissionMajor Hospital Cost(P)February1,300P850,000.00March8,500P1,350,000.00April1,600P1,150,000.00May1,400P950,000.00June1,200P800,000.00July200P50,000.00August1,650P1,200,000.00September1,550P1,050,000.00 The breakdown of the major hospital costs in the month of May at 1,400 hospital admission is as follows:Accommodation Expense (Variable)P400,000.00Utilities (Fixed)P300,000.00Medicine (Mixed)P250,000.00Total Overhead CostP950,000.00Requirements:Determine how much of major hospital cost for the month of August of P1,200,000.00 consisted of medicine costUsing high-low method, determine the cost function for MedicineUsing high-low method, determine the cost function for major hospital costWhat would be the total major hospital cost if hospital admission is at 2,000?

High-low method: High-low method is used to determine the total costs at different level when either…

Answered: Mendez Hospital showed the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Mendez Hospital showed the following major hospital costs at various levels of activity for CY 2020:

Month	Hospital Admission	Major Hospital Cost(P)
February	1,300	P850,000.00
March	8,500	P1,350,000.00
April	1,600	P1,150,000.00
May	1,400	P950,000.00
June	1,200	P800,000.00
July	200	P50,000.00
August	1,650	P1,200,000.00
September	1,550	P1,050,000.00

The breakdown of the major hospital costs in the month of May at 1,400 hospital admission is as follows:

Accommodation Expense (Variable)	P400,000.00
Utilities (Fixed)	P300,000.00
Medicine (Mixed)	P250,000.00
Total Overhead Cost	P950,000.00

Requirements:

Determine how much of major hospital cost for the month of August of P1,200,000.00 consisted of medicine cost
Using high-low method, determine the cost function for Medicine
Using high-low method, determine the cost function for major hospital cost
What would be the total major hospital cost if hospital admission is at 2,000?

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